MUMBAI: In their worst single-day drop in nearly 7 weeks, Sensex plunged 324 points and Nifty tanked 109 points on across-the-board selling on caution ahead of the outcome U.S. Federal Reserve's monetary policy meeting. An earlier-than-anticipated rate hike by Fed after the two-day meeting that starts later today could lead to outflows, hurting emerging markets as the incentive for investors to chase higher yields becomes smaller.

Major bourses in Asia ended down and Europe was weak in morning trades. Rupee also continued to remain above 61-mark against dollar as domestic indices ended at three-week lows. Besides, BJP heading for a sharp setback in bypolls appears to have had a bearing on sentiment, say brokers. All-round selling was seen as all 12 BSE sectoral indices closed in the red, with realty, power, capital goods, refinery, consumer durable, banking and auto segments taking the lead in the downslide.

The 30-share BSE Sensex resumed better but fell back and continued its fall on sustained heavy selling. It settled at three-week low of 26,492.51, a steep fall of 324.05 points or 1.21%. Previously, it had plunged by 414.13 points, or 1.60%, on August 1, 2014. Tata Power, Tata Steel, Hindalco, NTPC, Tata Motors, ONGC, RIL, GAIL led the 23 laggards in Sensex.